04.03.2025

Flat 9 months for Ashtead

UK based rental group Ashtead, owner of Sunbelt Rentals in the USA, Canada and the UK, has posted its results for the nine months to the end of January. They show flat overall revenues and lower pre-tax profits. The results are as follows

Nine months/YTD
Group revenues increased by just $31,000 to $8.26 billion, with rental revenues up five percent offset by a halving of used equipment sales. Pre-tax profits declined five percent to $1.61 billion, this due to higher depreciation and interest cost.
The results are broken down as follows

YTD by country

US Revenues: totalled $7.05 billion, very marginally lower than last year, due entirely to the steep drop in fleet disposals. Operating profit was $1.99 billion - 4%.
Canadian Revenues: were $529.6 million 5.6% with an Operating profit of $100.7 million +29%
UK Revenues: came in at $686.3 million +4.4% Operating profit of $55.7 million +7.5%

Capex & fleet age Capital expenditure so far this year has been $2.14 down 40% on last year, with disposals of $400 million. The average age of the fleet at the end of the period was 47 months, compared with 46 months at the same point last year. The full year capex forecast remains at $2.5 to $2.7 billion.
Acquisitions: The company has also spent $56 million on three ‘bolt on ‘ acquisitions, down from $906 million last year, they were as follows: :
In May Sunbelt USA acquired RentalMax a general tool rental business operating in Illinois.
In June Sunbelt Canada acquired Wave Equipment, a general tool rental business operating in Ontario.
In December Sunbelt UK acquired JLLive – including JLLighting and DigiSet.
Meanwhile the company continued with its share buyback programme.
Net Debt at the end of January was five percent lower at $10.6 billion, due to few acquisitions and lower capital expenditure. .
Third quarter
Total revenues in the last three months were nine percent higher at $2.66 billion, while pre-tax profits dropped 12 percent to $442 million.
Third quarter by country in dollars

US Revenues: totalled $2.2 billion -3.5% with an Operating profit of $564.2 million -6%
Canadian Revenues: were $158.1 million -7% with an Operating profit of $19.3 million +3.3%
UK Revenues: came in at $207.5 million 0% with an Operating profit of £8.6 million -21% - due large to a tax accrual.
Chief executive, Brendan Horgan said: "The business is focused on executing against the five actionable components of our Sunbelt 4.0 strategic growth plan: Customer, Growth, Performance, Sustainability and Investment. In North America, the strength of mega projects and hurricane response efforts have more than offset the lower activity levels in local commercial construction markets. These local construction markets have been affected by the prolonged higher interest rate environment. However, underlying demand continues to be strong, and we expect this segment to recover as interest rates stabilise. Adjusted profit before taxation was $1,698m with the difference, as expected, a result of lower used equipment sales.”
“The investments in and expansion of the business over Sunbelt 3.0 and into Sunbelt 4.0 are enabling us to take advantage of the diverse opportunities that we see while maintaining discipline and balance sheet strength that affords us considerable flexibility and optionality. In the period we invested $2.1bn in capital across existing locations and greenfields and $56m on three bolt-ons, adding a total of 54 new locations in North America.”

“We are in a position of strength, with the operational flexibility and financial capacity to take advantage of the ongoing structural growth opportunities we see for the business and enhance returns to shareholders. We expect full year results in line with our previous expectations and the board looks to the future with confidence.”

Vertikal Comment

While this year has seen an overall slowing in the seemingly relentless double digit growth of previous years, perhaps coming from a more cautious approach in light of the ongoing global uncertainties that we all face at the moment?

While Sunbelt is in a good position, the rental fleet is begining to get a little 'old in the tooth', with the Canadian and UK fleets having now reached 52 months, with no sign of it falling - given the current capex plans. This might come back to haunt it with higher repair and maintenance charges as the year progresses.

It seems that tool rental has been the main drag on the business, while ‘speciality’ rental continues to grow at solid pace. Perhaps this a sign of a long term change in the market?

All said and done another decent set of numbers from Ashtead.